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Renewed enterprise focus sees IoT software market skyrocket

IoT Analytics has published its IoT Software Adoption Report 2023, based on an extensive survey of 100 software end users in manufacturing, real estate, retail, and other industries. 

IoT software spending reached $53 billion in 2022 and continues to grow strongly. The latest IoT Software Adoption Report 2023
highlights the top 100+ IoT software vendors used today based on an extensive survey of IoT users.

"We have seen quite some shifts in the IoT software landscape during the last five to eight years," says Knud Lasse Lueth, CEO at IoT Analytics.

"Given where the market is now, with some large companies having recently exited the space while others are putting their foot on the gas, I would not be surprised to see several new, smaller players capture a significant portion of this fast-growing market in the coming years."

The big picture: The IoT software market in 2023
IoT software spending reached $53 billion in 2022, according to the IoT Analytics Global IoT Enterprise Spending analysis. The market grew a staggering 31% in 2022 because of renewed enterprise focus on IoT after the COVID-19 recovery; strong growth in the number of actively connected IoT devices to 14.4 billion worldwide; and a software technology replacement cycle causing companies to invest in containerised solutions, software-as-a-service, low-code user interfaces, and AI-enhanced software. With the number of active IoT devices projected to reach nearly 30 billion by 2027, IoT software market growth is guaranteed.

6 IoT software architecture choices
Companies pursue dozens of IoT use cases (examples include remote monitoring, predictive maintenance, and machine vision). Those use cases require software that can be realised in six ways. Companies can add their IoT devices to existing software (e.g., ERP, MOM, PLM, or SCADA), build IoT software in-house, hire a third party to build IoT software, use several open-source software components (e.g., Apache Kafka and Eclipse Mosquitto), buy IoT software components (e.g., platforms and middleware), and buy entire IoT offerings.  

Option 1, adding to existing software, promises stability, reliability, and security. However, the past few years have shown that this approach has shortcomings, which have given rise to options 4, 5, and 6. For option 5 and 6, there are hundreds of commercial offerings that are specifically designed for IoT device data, do not come with the baggage of older enterprise architectures, and bring an element of scalability.

Recent IoT software divestitures
The recent announcements of IoT software discontinuation by three heavyweights (Google, SAP, and IBM) have rattled the IoT community. Nevertheless, the results of the survey show that a significant number of users are still leveraging these to-be-retired services.  IoT Analytics says that there is a natural market consolidation in IoT software, and more specifically in IoT platforms. 

IoT software companies are doubling down on IoT
However,  IoT Analytics is tracking many other thriving IoT software companies that are doubling down on a longer-term IoT vision. The survey results confirm there is no appetite to stop investing in IoT software on the end-user side, although the high growth for the IoT platform segment seems to be over and end-users are putting more money, for example, into individual applications. Due to the recent IoT divestitures, end-users are also becoming more careful about choosing their software vendor partner.

8 leading IoT software companies in 2023

1. Microsoft
According to  IoT Analytics estimates, Microsoft is the IoT software market share leader, with a 9% share of the market in 2022. Almost 60% of the respondents in this survey use Microsoft software as part of their IoT setups. Microsoft has an offering in all 11 of the analysed IoT software types. Some of Microsoft's most prominent IoT software solutions include Azure IoT Hub, Defender for IoT, Azure IoT Edge, and Azure RTOS.

2. Amazon Web Services
AWS is the global market-leading cloud provider and has made several IoT software investments since the launch of its IoT Core service in 2015. Survey respondents use AWS IoT software products in six of the 11 IoT software types. Prominent examples besides AWS IoT Core include AWS IoT Greengrass and Amazon DynamoDB IoT. As a result, AWS IoT software is expected to continue to grow. The survey results show that users expect to continue to increase IoT software spending with AWS, particularly companies in North America and smaller and medium-sized companies.

3. Siemens
Even though the company has moved away from heavily marketing its Mindsphere IoT platform, Siemens continues to invest in IoT. Two of the main strategic initiatives for Siemens include the Siemens Xcelerator portfolio of modern cloud-based SaaS-based software offerings (including industrial IoT applications) and the new Industrial Edge offering (including several IoT applications). Like Microsoft and AWS, Siemens received a high customer satisfaction rating in this survey, consistent with previous IoT Analytics surveys on IoT and IoT-centric topics.

4. IBM
Despite the deprecation of the IBM Watson IoT platform announced in November 2022, IBM remains one of the leading IoT software vendors (for now). Due to the company's strong penetration rate in enterprises, many companies have used IBMs tools for their IoT setups. It will be interesting to see how the picture changes in 2024, as customers must move their IoT deployments off IBM Watson IoT by 1 December 2023.

5. Cisco
Cisco has been a player in the IoT software landscape for years. Some prominent IoT offerings include the Cisco Edge Intelligence platform and the company's IoT security products (e.g., Cisco ISE).

6. Oracle
Oracle is an enterprise software powerhouse and a cloud hyperscaler (although much smaller than the market leaders). Oracle's IoT setups include the Oracle IoT Cloud Service and Oracle databases (e.g., Oracle Database).

7. PTC
PTC has been executing its IoT vision since the acquisition of Thingworx in 2013. To date, ThingWorx remains one of the leading IoT platforms, but it is not the only IoT tool PTC has to offer. Other prominent PTC tools for IoT scenarios include Kepware (message broker/protocol conversion tool) and Vuforia (AR/VR).

8. MongoDB
MongoDB has established itself as the commercial IoT database of choice for many IoT setups. Moreover, the company is on an impressive growth path in the wake of general workload movements to the cloud: the company's top line more than tripled during the last three years to more than $ 1 billion per year (IoT is a portion of that). In addition, our survey participants gave MongoDB a high satisfaction rating for their IoT offering.

Looking ahead
These are just 8 of the 100+ IoT software companies  IoT Analytics analysed as part of the research. Although some parts of the IoT software landscape are consolidating (as highlighted above), the landscape remains dispersed. Smaller vendors still have room to fill the gaps and find their niches. 

"The technological shifts happening right now (e.g., more powerful edge computing, new protocols, cloud-native software development, and containers) provide tremendous opportunities for any company to jump in and offer a more modern and native software experience,"  IoT Analytics says. 

"We have seen quite some shifts in the software landscape during the last five to eight years, and given where the market is now, it will not be surprising to see several new, smaller players capture a significant portion of this fast-growing market in the coming years.

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